Forum Discussion

stevecoles64's avatar
stevecoles64
Contributing User
2 years ago

Average Cost vs Standard Cost for Sales Reporting

We currently use Average Cost for Inventory and Sales.   Our problem is that the Average Cost isn't the true cost - it isn't capturing all of the costs in the item. This artificially increases the ...
stevecoles64's avatar
stevecoles64
Contributing User

Thanks Mike. You've hit the nail on the head.

 

I'm not the accountant, I'm just the sales manager trying to get an accurate GP report on sales.

 

Right now all of our inventory is undervalued because it only includes the original supplier's invoice cost, not the Port Charges, Customs Agent Fees etc.

 

The accountant can't work out how to include costs from various sources into an Inventory Item. My idea was to change to a Standard Cost with a factor to cover the other costs, but that may not be the answer we need. It won't be 100% accurate but better than we have now and good enough for Sales/GP reporting.

 

Is there a right way to capture all of the costs in the Item?

  • stevecoles64's avatar
    stevecoles64
    Contributing User
    2 years ago

    Mike_James 

     

    Thanks Mike. I think that's the answer. I'll go through it with our internal accountant today.

     

    Thanks for your help.

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